Canaccord Genuity Acts as Financial Advisor to Columbia Care on its Pending US$2.0 Billion Sale to Cresco Labs
Canaccord Genuity is pleased to announce that on March 23, 2022, its client, Columbia Care Inc. (NEO: CCHW) (CSE: CCHW) (OTCQX: CCHWF) (“Columbia Care” or the “Company”), announced that they have entered into a definitive arrangement agreement (“Arrangement Agreement”) pursuant to which Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) (“Cresco Labs”) has agreed to acquire all of Columbia Care’s issued and outstanding common shares (each a “Columbia Care Common Share”) and proportionate voting shares (each a “Columbia Care PVS”, and together with a Columbia Care Common Share, a “Columbia Care Share”) for 0.5579 (“Exchange Ratio”) of a subordinate voting share of Cresco Labs (“Cresco Labs SVS”) for each Columbia Care Share held (“Transaction”). The Exchange Ratio is subject to adjustment in the event that Columbia Care is required to issue shares in satisfaction of an earn-out payment for a prior acquisition, with the potential adjustment being in proportion to the additional dilution from such potential issuance.
Holders of Columbia Care Common Shares would receive the Exchange Ratio, while holders of Columbia Care PVS would have their shares exchanged for Cresco Labs SVS on an economically equivalent and “as if converted” basis. The Exchange Ratio implies an enterprise value for Columbia Care of ~US$2.0 billion and will result in Columbia Care Shareholders owning ~35% of the pro forma entity. The Transaction implies premiums to Columbia Care Shareholders of approximately (i) 16%, based on the closing prices of the Columbia Care Shares and Cresco Labs Shares, and (ii) 19%, based on the 20-day volume weighted average prices (“VWAP”) of the Columbia Care Shares and Cresco Labs Shares, in each case based on the Canadian Securities Exchange as of March 22, 2022.
The pro forma entity will be the largest multi-state operator by pro-forma revenue, with combined Q4 2021 annualized revenue of ~US$1.4 billion. The pro forma entity will have 130 dispensaries across an 18 market footprint and will cover all 10 of BDSA’s top-10 largest and fastest growing markets by 2025, representing ~55% of the U.S. population and over 70% of the addressable U.S. cannabis market. On a pro forma basis, Cresco Labs expects to have annual revenues in excess of $100 million in 8 different states by 2023 as it increases depth across other markets and diversifies its revenue base.
Columbia Care is one of the largest and most experienced cultivators, manufacturers and providers of cannabis products and related services, with licenses in 18 U.S. jurisdictions. Columbia Care operates 131 facilities comprised of 99 dispensaries and 32 cultivation and manufacturing facilities, including those under development. Columbia Care is one of the original multi-state providers of medical cannabis in the U.S. and now delivers industry-leading products and services to both the medical and adult-use markets.
Cresco Labs is one of the largest vertically-integrated, multi-state cannabis operators in the United States, with a mission to normalize and professionalize the cannabis industry. Employing a consumer-packaged goods approach, Cresco Labs is the largest wholesaler of branded cannabis products in the U.S. Its brands are designed to meet the needs of all consumer segments and are some of the most recognized and trusted national brands, including Cresco, High Supply, Mindy's Edibles, Good News, Remedi, Wonder Wellness Co. and FloraCal Farms.
Since 2018, Canaccord Genuity advised Columbia Care on 10 transactions across a variety of product and service offerings, including their IPO via the Canaccord Genuity Growth Corp. sponsored SPAC, a share repurchase program, multiple equity & debt financings, and their acquisition of Green Leaf Medical, all of which has culminated in the announced sale to Cresco Labs. In total, Canaccord Genuity has raised ~US$540 million for Columbia Care over 7 transactions, including its IPO, secondary offerings, and debt financings, while also providing wealth management services to key executives.
Canaccord Genuity acted as financial advisor to Columbia Care and provided a fairness opinion to the board of directors of Columbia Care.
The Canaccord Genuity team included Dan Daviau, Jamie Nagy, Mark Silvestre, Kevin Romano, Jeffrey Solomon, Andrew Harrison and Mark Joe from Investment Banking.
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